Andrew Mellon

Andrew William Mellon
49th United States Secretary of the Treasury
In office March 4, 1921 – February 12, 1932
Preceded by	David F. Houston
Succeeded by	Ogden L. Mills
Personal details
Born	March 24, 1855 Pittsburgh, Pennsylvania, USA
Died	August 27, 1937(1937-08-27) (aged 82) Southampton, New York, USA
Political party	Republican
Spouse	Nora McMullen Mellon
Profession	Politician, Banker

Andrew William Mellon (March 24, 1855 — August 27, 1937) was an American banker, industrialist, philanthropist, art collector and Secretary of the Treasury from March 4, 1921 until February 12, 1932.

Early life

He was born in Pittsburgh, Pennsylvania, USA, on March 24, 1855, the son of Scots-Irish immigrants from County Tyrone Northern Ireland. His father was Thomas Mellon, a banker and judge; his mother was Sarah Jane Negley Mellon. He was also brother of Richard B. Mellon. He was educated at the Western University of Pennsylvania (now the University of Pittsburgh), graduating in 1873.

Financial prodigy

Mellon demonstrated financial ability early in life by starting a lumber business at the age of 17. He joined his father's banking firm, T. Mellon & Sons, two years later and had the ownership of the bank transferred to him in 1882. In 1889, Mellon helped organize Union Trust Company and Union Savings Bank of Pittsburgh. He also branched into industrial activities, in oil, steel, shipbuilding, and construction. He ranked, at the time, as one of the three richest people in the United States alongside John D. Rockefeller and Henry Ford.

Family life

In 1900, Mellon married Nora McMullen after a lengthy courtship, in Hertford, England. They had two children, Ailsa Mellon-Bruce, born in 1901 in Pittsburgh, and Paul Mellon, born in 1907. Their marriage ended in a bitter divorce trial that would have a lasting impact on the entire family. In 1913, along with his brother, Richard B. Mellon, they established a memorial to his father, the Mellon Institute of Industrial Research, today a part of Carnegie Mellon University

Career

Fundraising

During World War I years he participated in many fundraising activities such as the American Red Cross, the National War Council of the Y.M.C.A., the Executive Committee of the Pennsylvania State Council of National Defense, and the National Research Council of Washington.

Cabinet secretary

Andrew Mellon was appointed U.S. Secretary of the Treasury and became a member of the Cabinet of President Warren G. Harding also called the Ohio Gang in 1921. As Harding's and subsequently Coolidge and Hoover's secretary of treasury, Andrew Mellon set about lowering taxes and reducing national debt. President Harding, in his address on March 4, 1921, had called for a prompt and thorough revision of the tax system, an emergency tariff act, readjustment of war taxes and creation of a federal budget system, among others. These were policies Mellon wholeheartedly subscribed to, and his long experience as a banker qualified him to set about implementing these programs immediately. As a conservative Republican and a financier, Mellon was irritated by the manner in which the government's budget was maintained, with expenses due now and rising rapidly, with income or revenues not keeping pace with those expense increases, and with the lack of savings.

The Mellon Plan

Mellon proposed a series of tax cuts--in 1921, 1924, and 1926. He won approval of reduced income tax rates across the board, and also got the estate tax lowered.

He was a strong supporter of tac cuts for the rich. Mellon also believed that the income tax should remain progressive, albeit with lower rates than those enacted during World War I.

Mellon championed preferential treatment for "earned" income relative to "unearned" income. As he argued in his 1924 book, Taxation: The People's Business:

The fairness of taxing more lightly income from wages, salaries or from investments is beyond question. In the first case, the income is uncertain and limited in duration; sickness or death destroys it and old age diminishes it; in the other, the source of income continues; the income may be disposed of during a man’s life and it descends to his heirs. Surely we can afford to make a distinction between the people whose only capital is their metal and physical energy and the people whose income is derived from investments. Such a distinction would mean much to millions of American workers and would be an added inspiration to the man who must provide a competence during his few productive years to care for himself and his family when his earnings capacity is at an end.

In November 1923, Mellon presented to the Chairman of the House Ways and Means Committee a letter in which he outlined what has come to be known as "Mellon Plan". It was a program for tax reform based upon the idea of lowering taxes out of surplus revenues. It subsequently became law as the Revenue Act of 1924, although without some of the reforms Mellon advocated. It did reduce the taxpayers' bill by some $400 million annually over what would have been collected if the 1921 tax rates had remained in effect. Mellon reduced the public debt (largely inherited from World War I obligations) from almost $26 billion in 1921 to about $16 billion in 1930, but then the Depression caused it to rise again.

The Great Depression

Mellon on U.S. stamp

Mellon became unpopular with the onslaught of the Great Depression. Upon leaving the Treasury Department and President Hoover's Cabinet in February 1932, Mellon accepted the post of U.S. Ambassador to the United Kingdom, serving for one year and then retiring to private life.

Personal life

During his retirement years, as he had done in earlier years, Mellon was an active philanthropist, and gave generously of his private fortune to support art and research causes.

In 1937, he donated his substantial art collection, plus $10 million for construction, to build the National Gallery of Art, an art museum, located on the National Mall in Washington, D.C. The Gallery was authorized in 1937 by the Congress.

Three such concepts that grew to giant proportions with Mellon's backing were Charles Martin Hall, which Mellon built into the Aluminum Company of America; his aid to Edward Goodrich Acheson, becoming his partner in manufacturing carborundum steel, which Mellon built into the Carborundum Company; and creation of an entire industry through his help to Heinrich Koppers, who invented coke ovens which transformed industrial waste into usable products such as gas, tar, and sulfur.

The Mellon Tax Trial

At the end of his term as Treasury Secretary, he became the subject of an income tax investigation into his personal tax returns. The Justice Department pressed forward to empanel a grand jury, which declined to come forth with an indictment. A two year civil action beginning in 1935, dubbed the "Mellon Tax Trial," eventually exonerated Mellon, albeit several months after his death.

Death

Mellon died on August 27, 1937, in Southampton, Long Island, New York. He is buried in Pittsburgh's Allegheny Cemetery.

The Andrew W. Mellon Foundation, the product of the merger of the Avalon Foundation and the Old Dominion Foundation (set up separately by his children), is named in his honor, as is the 378-foot U.S. Coast Guard Cutter Mellon.

• Mother: Sarah Jane Negley (b. 1817, d. 1909)
• Brother: Richard B. Mellon (b. 1858, d. 1933)
• Wife: Nora McMullen (m. 1900, div., d. 1973)
• Daughter: Ailsa Mellon Bruce (b. 1901, d. 1969)
• Son: Paul Mellon (b. 1907, d. 1999)

Books

• Mellon, Andrew W.,Taxation: The People's Business Ayer Company (June 1924) ISBN-10: 0405051018

ISBN-13: 978-0405051012

References

• David Cannadine, Mellon: An American Life, Knopf, 2006, ISBN 0-679-45032-7
• Biography at the U.S. treasury department

See also

• Great Depression

External links

• The Andrew W. Mellon - Mellon Foundation Biography by David Cannadine
• The Andrew W. Mellon Foundation
• taxhistory.org - an essay on Mellon's tax policies
• Overview of Mellon Tax Cut Plans